https://boards.hellobee.com/ Pregnancy, Baby and Parenting blog, by Hellobee en Tue, 05 May 2026 13:59:48 +0000 https://boards.hellobee.com/topic/cash-retirement-to-pay-off-car#post-1246187 Wed, 27 Nov 2013 03:13:15 +0000 hellocupcake 1246187@https://boards.hellobee.com/ <p>I am completely clueless as to how this stuff works but I have a question:</p> <p>Why would it be a bad idea to take out the money, pay off the car (that is charging interest), and then continue to make your "car payment" but put the money into your retirement fund/a savings account or something? That way you aren't "losing" money. </p> <p>Sorry if this is a dumb idea, I really wish I were better at this type of stuff, I plan to find out more as we get out of debt and into thinking about the future but for now I am clueless and thought maybe someone could give me the easy explanation (: TIA :) </p> https://boards.hellobee.com/topic/cash-retirement-to-pay-off-car#post-1245728 Tue, 26 Nov 2013 20:24:55 +0000 BKCaribBaby 1245728@https://boards.hellobee.com/ <p>No. A car is a depreciating asset. Based on what you've said, it sounds like this money will grow over time. If you'd like to pay off the car sooner, maybe you can find ways to cut other expenses and pay extra on the car. Good luck! </p> https://boards.hellobee.com/topic/cash-retirement-to-pay-off-car#post-1245677 Tue, 26 Nov 2013 20:02:45 +0000 sarac 1245677@https://boards.hellobee.com/ <p>That money will be so much more valuable if you leave it where it is - I'd never touch retirement money except for a desperate emergency. </p> https://boards.hellobee.com/topic/cash-retirement-to-pay-off-car#post-1244842 Tue, 26 Nov 2013 14:59:18 +0000 cmomma17 1244842@https://boards.hellobee.com/ <p>Don't do it! </p> https://boards.hellobee.com/topic/cash-retirement-to-pay-off-car#post-1244836 Tue, 26 Nov 2013 14:58:33 +0000 yoursilverlining 1244836@https://boards.hellobee.com/ <p>@Mrs. Sketchbook: my employer does the same (and has 401k matching, separately), and I know that if you pull $ out of that vested retirement fund, you are definitely subject to tax penalties of some kind (I'm not sure specifically what penalty. since I'm not interested in withdrawing from it, but I know that is is definitely not "free for the taking" so to speak). I would not touch it to pay off a car loan. </p> https://boards.hellobee.com/topic/cash-retirement-to-pay-off-car#post-1244821 Tue, 26 Nov 2013 14:55:01 +0000 littlek 1244821@https://boards.hellobee.com/ <p>@Mrs. Sketchbook: I would need to know more specifics to tell you the tax treatment. But my guess is if you took it out, it would go in box 1 of your husbands w-2 and be subject to ordinary income tax rates.</p> <p>EDIT- Not sure about penalties.. but it would definitely be taxed.. </p> https://boards.hellobee.com/topic/cash-retirement-to-pay-off-car#post-1244814 Tue, 26 Nov 2013 14:53:40 +0000 MamaMoose 1244814@https://boards.hellobee.com/ <p>@runnerd: agree. It sounds to me like a profit sharing plan, but that's qualified money. </p> https://boards.hellobee.com/topic/cash-retirement-to-pay-off-car#post-1244808 Tue, 26 Nov 2013 14:52:51 +0000 yellowbird 1244808@https://boards.hellobee.com/ <p>I wouldn't touch it! </p> https://boards.hellobee.com/topic/cash-retirement-to-pay-off-car#post-1244806 Tue, 26 Nov 2013 14:52:44 +0000 mlm2934 1244806@https://boards.hellobee.com/ <p>@Mrs. Sketchbook: Oh ok. I'm not savvy on arrangement where your employer sets money aside for you without it being a retirement plan. I would definitely ask his employer for more documents on what the plan set-up is though! </p> https://boards.hellobee.com/topic/cash-retirement-to-pay-off-car#post-1244799 Tue, 26 Nov 2013 14:50:25 +0000 JoJoGirl 1244799@https://boards.hellobee.com/ <p>no no no! The retirement account will accrue/compound value much faster than your car loan will accrue interest.... that's usually the way to tell. ie what's the interest rate on your car? Assuming it's relatively low (say under 4%?) don't take away from any investments to pay it off. </p> https://boards.hellobee.com/topic/cash-retirement-to-pay-off-car#post-1244787 Tue, 26 Nov 2013 14:48:02 +0000 LuLu Mom 1244787@https://boards.hellobee.com/ <p>@Mrs. Sketchbook: I wouldn't touch it, retirement money should be left alone to build up. Not worth taking it ALL out in the first year to pay off a car loan. Pretend it is not even there. </p> https://boards.hellobee.com/topic/cash-retirement-to-pay-off-car#post-1244780 Tue, 26 Nov 2013 14:46:58 +0000 Mrs. High Heels 1244780@https://boards.hellobee.com/ <p>@Mrs. Sketchbook: I wouldn't touch it. Compounded interest! </p> https://boards.hellobee.com/topic/cash-retirement-to-pay-off-car#post-1244772 Tue, 26 Nov 2013 14:45:27 +0000 Mrs. Sketchbook 1244772@https://boards.hellobee.com/ <p>@Runnerd: To clarify about the account, it is just that his employer puts an amount equal to 10% of his salary into this account. He doesn't have to put any of his paycheck into this account. I don't even know if he is allowed to. I'm not sure what the tax repercussions are for a setup like this. </p> https://boards.hellobee.com/topic/cash-retirement-to-pay-off-car#post-1244770 Tue, 26 Nov 2013 14:45:15 +0000 littlek 1244770@https://boards.hellobee.com/ <p>I wouldn't touch it. </p> https://boards.hellobee.com/topic/cash-retirement-to-pay-off-car#post-1244766 Tue, 26 Nov 2013 14:44:50 +0000 MamaMoose 1244766@https://boards.hellobee.com/ <p>Any sort of qualified retirement account has penalties to draw before the age of 59 1/2.... </p> <p>I would never cash out a retirement plan to pay off a car. Saving for retirement is so important. And because there are contribution limits you can never make up for lost years of saving. ESPECIALLY in this market environment where his return on the invested money is probably significantly higher than the interest you're paying on the loan. </p> https://boards.hellobee.com/topic/cash-retirement-to-pay-off-car#post-1244765 Tue, 26 Nov 2013 14:44:49 +0000 mlm2934 1244765@https://boards.hellobee.com/ <p>If it isn't a qualified retirement plan, and you have other savings for retirement in addition to this fund, I'd say do it.</p> <p>Just to clarify though, is it a pension or ESOP? Cause it would still have penalties and withdraw restrictions if that's the case. And regardless of whether there are penalties, the employer may have restrictions on when you can withdraw the money. </p> https://boards.hellobee.com/topic/cash-retirement-to-pay-off-car#post-1244764 Tue, 26 Nov 2013 14:44:43 +0000 swedishfish 1244764@https://boards.hellobee.com/ <p>I would leave it alone. I don't touch my retirement accounts. In fact, I pretend they're not even there. </p> https://boards.hellobee.com/topic/cash-retirement-to-pay-off-car#post-1244760 Tue, 26 Nov 2013 14:43:50 +0000 loveisstrange 1244760@https://boards.hellobee.com/ <p>Nope. Retirement is way more important than paying off the car, IMO. </p> https://boards.hellobee.com/topic/cash-retirement-to-pay-off-car#post-1244759 Tue, 26 Nov 2013 14:43:49 +0000 Mamaof2 1244759@https://boards.hellobee.com/ <p>I would not. Retirement is for retirement - unless you are in dire need of cash flow and MUST pay off the car right NOW! </p> https://boards.hellobee.com/topic/cash-retirement-to-pay-off-car#post-1244758 Tue, 26 Nov 2013 14:43:10 +0000 mrsjyw 1244758@https://boards.hellobee.com/ <p>I wouldn't touch it. The car note is something that's already been accounted for your monthly expenses and will end at some point. I wouldn't do anythign retirement related (penalty or not) to pay off a living expense. That's my preference though. </p> https://boards.hellobee.com/topic/cash-retirement-to-pay-off-car#post-1244740 Tue, 26 Nov 2013 14:40:56 +0000 Mrs. Sketchbook 1244740@https://boards.hellobee.com/ <p>My husband has a really great retirement program at work, and this year (his first year when he could be a part of the program), he has accrued enough to pay off our car loan. Would you do it, or keep it in the account? It isn't a 401k, so there isn't a penalty the way there is with those accounts. It is invested, though, and it is making money right now. The car is a 2010 so far no problems with it. We are 29 and 30. He is the only one working right now, although I do plan to return to work after we are done having children. </p>